Devoting resources to avoiding the costs of expected inflation leads to:
A) eliminating the costs of expected inflation.
B) fewer relative price changes.
C) economic inefficiency.
D) a decrease in the transaction velocity of money.

Question

Quizplus · Accepted Answer

Devoting resources to avoiding the costs of expected inflation, such as through indexing or continually adjusting prices, creates economic inefficiency. These resources could have been better used on other productive activities instead of simply trying to keep up with inflation.

Devoting Resources to Avoiding the Costs of Expected Inflation Leads